With continuous innovation and launch of new higher margin products, higher contribution from subsidiaries, we expect the revenues to grow at ~17% CAGR between FY19-21E. However increasing competition may pose a threat to companies pricing power and existing market share, as company plans to focus on growth and profitability. While we expect the company to maintain growth momentum, we maintain target of Rs 1,398 valuing Symphony at 42x FY21E EPS of Rs 33.2.
Symphony’s 1Q performance was a blowout, even beat our aggressive estimates. 1Q performance has proved the naysayers wrong about the relevance of air coolers (in the era of fast growing RAC) and Symphony’s market share loss. Growth visibility for FY20E is high despite slowdown in macros owing to low channel inventory and new launches. We maintain our estimates and value Symphony at 45x Jun- 21 EPS, arriving at a TP of Rs 1,686. Maintain BUY.
We model revenue, earnings CAGR of 21%, 7%, respectively, in FY18-21E led by strong volume growth in the domestic business. Despite a strong recovery in Q1FY20, we believe consolidated EBITDA margins in the medium term would be under stress due to rising competition and consolidation of low margin business (consolidated EBITDA margin ~23% vs. standalone EBITDA margin of ~30%). Hence, we maintain HOLD rating on the stock with a revised target price of Rs 1295 (valuing at 38x FY21E).